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SAP and Sports: What's the Catch?

by Kenneth Murphy

May 22, 2013

by Ken Murphy

@KMurphyWisPubs

During the SAPPHIRE NOW opening keynote last week, Under Armour CEO Kevin Plank took the stage with SAP co-CEO Bill McDermott and explained how he set out to re-invent the plain, gray sweat-soaked T-shirt by introducing something that aided performance and looked good at the same time.

The sweaty T-shirt, he argued, added weight, and weight slows you down. Logical enough.  Plank parlayed this reasoning into a $1.8 billion company (with SAP as the company’s tech partner since 2005) steamrolling holdovers like me who actually liked the sweaty T-shirt as a visible sign of accomplishment. (Peeling off a sweat-soaked T after a run was one of the more satisfying parts of the work-out; like taking off a pair of ski boots at the end of the day, but I digress.)

Then again, Plank didn’t build a multi-billion dollar company by marketing to weekend warriors like me. He went after NFL and college football players, and we weekend warriors gamely followed along, convinced in short order that “cotton is rotten” because, well, all the cool kids were doing it (read: ballplayers). The sports angle, though, at least initially, probably had little to do with SAP’s interest in the “performance apparel” market. SAP just saw a growing company and believed it could help take it places.

Of course, Plank’s appearance on-stage with other sports figures during the opening SAPPHIRE keynote does make one wonder why SAP’s interest in sports is seemingly on the rise. Is it because McDermott’s grandfather is in the NBA Hall of Fame? Is it because co-founder Hasso Plattner is majority owner of the NHL’s San Jose Sharks (tied 2-2 with the L.A. Kings in the Stanley Cup playoffs)? Is it because SAP teamed with the NFL’s San Francisco 49ers to help deliver the “ultimate fan experience”?

Or, perhaps more accurately, is it because SAP sees that harnessing the nexus of forces as they relate to the sports world is a great way to tap into the roughly $25 billion in revenue generated by the four major U.S. sports leagues?  

Plank let it be known during the keynote that Under Armour plans to be a huge player in the wearable technology craze, which pro sports leagues will no doubt be affiliated with. This timely announcement, though far from a secret, came just three days before a Credit Suisse report (which Business Insider cites here) claiming that while wearable technology is roughly a $5 billion market today; it will balloon to perhaps a $50 billion industry in just a few years. That’s a lot of electronics on a lot of clothing, and a lot of opportunity for technology companies wishing to expand from traditional on-premise enterprise installations.

SAP’s plans to come along for the ride is the enterprise equivalent of not wanting to be the last one stuck with a closet full of heavy cotton athletic T-shirts.

Some other fun tidbits from the Credit Suisse report:

  • There are more than 250 million installed mobile operating systems that can support wearable technology. 
  • An iWatch could generate $10 billion a year in revenue with an EPS of $3.30. There are currently only nine smartwatches available today.
  • Watches are a $56 billion market.
  • Regarding retail impact, Nike, Adidas, and Under Armour have best leveraged wearables to enhance the fitness experience and efficacy of their products.
  • The health and fitness market is about $2- to $3 billion.
  • By 2020, batteries are expected to be 2.2x more powerful.

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